Quantitative easing and the investor

Chris Kacher and Gil Morales are managing directors of MoKa Investors LLC
and co-founders of
Virtue of Selfish Investing. Both were senior portfolio
managers at William O’Neil + Co. They co-authored the book "Trade Like an
O’Neil Disciple: How We Made 18,000% in the Stock Market." Kacher received his
B.S. in chemistry and Ph.D. in nuclear physics from the University of California
at Berkeley, where he studied under Nobel laureate Glenn Seaborg and
helped to discover Element 110 on the Period Table of Elements and to confirm
Element 106.

Quantitative easing (QE) has been with us since early 2009. It has rendered many tried-and-true market indicators impotent since price/volume action in leading indices has become somewhat less reliable. Stock market timing techniques since 2009 have been more or less decimated with only the exception of this website and a couple of others, and that said, it has not been an easy environment.

Further, pyramiding trending vehicles such as silver
SLV, -1.85%
and a couple key stocks in 2011 made all the difference. This year, as of March 12, jumping on board a basket of leading stocks puts 2012 in a much better light than 2011, which was a year of trendless, news-driven, gap-up/gap-down volatility.

QE is an effective manner to manipulate the stock market higher, often on anemic volume, creating the illusion of wealth and an improving economy. And since people vote with their portfolio pocketbooks, such investors are more likely to buy stocks in such a stealth bull market environment, creating a further illusion of wealth. Meanwhile, the slow destruction of the dollar and other currencies ensues, as central banks around the world continue to print money.

An exchange traded fund (ETF) that conservative investors may benefit from in the long run is PowerShares DB US Dollar Index Bearish Fund
UDN, -0.49%
that corresponds to the Deutsche Bank short U.S. dollar index futures index. As the dollar goes lower, UDN goes higher.

And with QE at the ready, hard assets should continue to do well in the long run. Silver ETF SLV mirrors the price of silver. Gold ETF
GLD, -1.12%
mirrors the price of gold. More aggressive investors can also try their hand at two-times ETFs
AGQ, -3.61%
(silver) and
DGP, -3.50%
gold or three-times ETFs
USLV, -5.58%
(silver) and
UGLD, -3.45%
(gold). Gold has been in a long-term uptrend since 2001, and technical and fundamental signs point to a continuation of this uptrend.

The stock market itself which has been in a big bull market since early 2009, the dawn of the "Age of QE", continues to show strength. Apple Computer, Inc.
AAPL, +1.72%
continues to forge higher since early 2009. Given that it is nearly 20% of the weighting of the NASDAQ-100 explains the outperformance of this index compared to the slower Russell 2000, S&P 500 and Dow Jones Industrial Average.

That said, one could try their hand at a number of major stock market indices such as
QQQ, +0.26%
(1-times NASDAQ-100),
SPY, +0.06%
(1-times S&P 500),
DIA, -0.06%
(1-times Dow Jones Industrial Average), or
SMH, +0.12%
(1-times SOX semiconductor index). There are also 2-times and 3-times ETF equivalents, but always remember to position size according to your risk tolerance levels, so you can exit the position should it fail without it doing untold damage to your finances or investing psychology.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.